Summary
Based upon new car sales trends being documented among most west coast retailers across all brands of domestic automakers, things are worse than even the most pessimistic predictions. Most of the Metro are domestic car dealers are off over 20% from their same quarter last year numbers. Who is still selling cars in this market at or below last years pace? No one! Metro area Toyota and Honda Dealers tell me their sales are off by as much as 5% and for once they can get all of the product they want just in time to see demand slip out from under them. While the experts on Wall Street have predicted a 1.6% decline in new car sales for 2008, based upon my vantage point here on the front lines of this market segment and based upon what is actually happening ...(or not happening) on sales floors and showrooms across the western United States, it is my opinion those numbers are extremley optimistic.
Analysis
There are alot of dealers in trouble across the U.S. who will not be able to keep their doors open as the nation dips into a recession brought on by higher than ever gas prices. Single point/single brand dealers and dealership groups that are heavily weighted towards domestic auto's are faring the worst with sales in this region down 20% or more against same quarter results from last year. The downturn isn't exclusive to the domestic's dealers either with even some recent Honda and Toyota sales numbers for some months falling short of the numbers posted for 2006/7.
Based upon the view from my vantage point I would be surprised to see us break through the 15 million unit mark, nationally for 2008. Judging from the trends of even the largest auto groups in the U.S. including Asbury Automotive Inc. (whose product mix of new car franchises is heavily weighted towards imports) reported an almost 3% drop in new car sales for 2007. There is no question in anyone's mind that 2008 will be the worst year for new car sales in recent memory and the key to suriving these times of low showroom traffic and high gas prices will be in each dealers ability to shift the focus of his business away from the sales of new domestic cars and trucks and into fuel efficient longer lasting used imports. Alot has been written about the automakers renewed interest in reducing the number of dealerships in heavily saturated areas of the U.S. by encouraging and helping to facilitate that downsizing. The market has its own way of squeezing out the weak sisters and poorly run operations in highly competitive markets as well. Right now the market appears to be prepared to do the dirty work of the big 3 ....at least out west and based upon things from my vantage point we are all in for a rougher ride than people think. I would be shocked to see sales of 16 million units ...I would be a surprised to see sales of even 15.5 million units. Where I have my money on the wheel of fortune (new car edition) is on the under 15 million units square and I am all in!
